Eastern retail rentals head south  ( January '18,2001, ET)

KOLKATA IT’S eastward ho for biggies like Shopper’s Stop, Ebony, Megabowl and others. And the Kolkata retail real estate market is feeling the shakes all over. What is most sensational is the fact that rental per sq ft in key projects are being deliberately lowered by city developers for the first time to keep overall business flowing. “In a complete reversal of trend, developers are now letting out prime properties at Rs 50 per sq ft against the going rate of Rs 100-150 per sq ft just a year ago,” real estate tycoons confided to ET.

“The steep rental and sale price per sq ft had acted as a deterrent to the entry of large-format stores even nine months back. But with the rates now being pulled down voluntarily, the overall business is getting better,” they said. Proof of the pudding was in the positive response evoked by, say, Shopper’s Stop, Ebony or Megabowl. Some of these mega retail chains and entertainment groups had actually set up shop elsewhere at comparable rates. “There was little justification in Kolkata rates being pegged so high,” the sources added. Here’s what the pan-India retail rental chart looks like.

Kolkata prime area (Park Street, Loudon Street, Camac Street etc) rental has come down to Rs 90 from Rs 120 per sq ft per month a year back; secondary area (Gariahat, Rash Behari Avenue) rental is down to Rs 50-55 from Rs 90-100 per sq ft per month; and suburban area rental remains more or less static at about Rs 25 per sq ft per month.

Comparatively, primary area rental in Mumbai is Rs 250, Delhi Rs 200, Bangalore Rs 100, Chennai Rs 75 and Hyderabad Rs 70 per sq ft per month. Secondary area rental in Mumbai is Rs 150, Delhi Rs 80, Bangalore Rs 60, Chennai Rs 45 and Hyderabad Rs 35 per sq ft per month. Suburban rental in Mumbai is Rs 70, Delhi Rs 65 and Bangalore Rs 30 per sq ft per month.

With Kolkata rates beginning to fall in line with the all-India structure, the city, at last, is beginning to get a feel of the retail revolution that had perhaps begun with the setting up of Crossroads at Mumbai in 1999. “This growth is being fuelled by rising disposable incomes and changing consumption patterns of consumers,” analysts said.

Many foreign retail chains have since established presence in the country: from the Adidases, Nikes and Mattels of the world to the Swarovskis and Lacostes.

But, so far, bulk of this buzz was concentrated in other metros. Now, with Kolkata developers turning wiser, most on the real estate circuit here expect to see a bee-hive of activity opening up shortly. Real estate players are now wooing global names to be enconsed in its upcoming “concept shopping malls” which aim to vie with the skylines of international shopping marts.

The retail real estate price mechanism, for the first time in years, is about to take a downward swing. “Another key factor is that land owners have realised that lowering the entry barrier can actually boost up the market and help them gain returns in terms of expanded demand and more takers,” real estate analysts added. The current outright sale prices for prime property in Kolkata ranges between Rs 6,000 and Rs 10,000 per sq ft, while rentals till a couple of months ago varied between Rs 70 and Rs 150 per sq ft, matched that of Delhi’s. Factors like a high Calcutta Municipal Corporation tax on rentals compared to other metros along with the West Bengal Tenancy Act, which many land-owners feel is not inclined in their favour, has been hurdles to the increasing retailers interest in the city.

Typically, large scale format stores look for specialised infrastructure at remunerative prices. And with shopping malls being planned in dozens, Kolkata is gearing up to cater to the hotting scenario. “Phenomenal success and burgeoning earnings per sq ft reported by the Pantaloon showroom and Musicworld at Kolkata acted as an eye-opener for westside, ECT Entertainment, Kids Kemp and Toysrus. All of them have evinced interest in catching the fancy of Kolkata customers,” said a real estate consultant.